Key Points
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Economics are driving the shift. Aging plants, cheap gas, and low-cost renewables make coal less competitive.
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Storage is the tipping point. Batteries are removing coal’s baseload advantage.
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Solar + storage is already winning. In some cases, it’s cheaper than running existing coal plants.
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It was once the darling of the American energy infrastructure.
For more than a century, coal powered the United States. It fueled industrial growth, electrified cities, and became the backbone of the U.S. energy system. But today, it’s beginning its descent from an integral part of the global energy economy to romantic fodder for history books.
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To be sure, this transition away from coal will not happen overnight, but the bottom line is that coal once generated more than 50% of the electricity in the U.S. Today, it accounts for around 17%. By 2035, it could be down to just 7%.
Make no mistake: this is not a cyclical shift, it’s a structural one that completely alters the macro investment thesis for energy in the United States.
Three Forces Are Pushing Coal Out Faster Than Expected
Forecasts show U.S. coal-fired electricity generation will fall another 7% in 2026, driven by a variety of factors, including:
Much of the U.S. coal fleet is simply old. Most of these plants date back several decades, and utilities are finding that it often costs less to replace these plants altogether than to keep them running.
Natural gas has reshaped the economics of power generation. The shale boom made gas abundant and relatively inexpensive, giving utilities a more flexible alternative to coal.
Solar and wind are no longer niche technologies. They’ve become some of the lowest-cost sources of new electricity generation in the U.S., and that cost advantage is accelerating coal-fired power plant retirements.
This trifecta of influences has greatly diminished coal’s role in the country’s energy economy. And thus, greatly diminished its market value, particularly when you couple this with the rapid development of new battery energy storage technologies, which are making the baseload power argument for coal less attractive.
Image source: Getty Images.
The Grid Doesn’t Need Coal the Way It Used To
If you’re unfamiliar, baseload power is the electricity we need all the time, no matter what. Essentially, it’s the minimum amount of power the grid must supply 24/7. Providing baseload power is what coal has long done. But with the integration of battery energy storage systems tied to solar and wind projects, the argument for relying on coal-fired power because of its ability to provide baseload power is becoming less sound.
You see, grid-scale batteries allow utilities to store excess electricity generated during periods of high renewable output (particularly midday solar) and deploy it later when demand rises. In practical terms, this means solar power generated at noon can now help meet peak evening demand, one of the traditional roles coal plants have filled.
In some regions, utilities are already finding that a combination of solar plus storage can compete directly with existing coal plants. Not just new builds, but plants that are already paid off. Indeed, when it becomes cheaper to replace an existing coal facility than to keep it running, retirements tend to accelerate.
Battery storage doesn’t just complement renewables, it amplifies their impact. It effectively removes one of the last structural advantages coal has held for decades. And as that advantage disappears, so does coal’s role in the modern grid.
Coal Can’t Compete With What’s Coming Next
To be sure, that advantage is disappearing as battery energy storage system costs have plummeted over the past few years.
According to Bloomberg New Energy Finance (BNEF), the global benchmark cost for a four-hour battery project fell 27% year-on-year to $78 per megawatt-hour in 2025. That’s a record low since BNEF began tracking costs in 2009.
Although it will take years for the proliferation of battery energy storage systems to have a measurable impact on coal’s relevance in a modern energy economy, we’ve lit the fuse. And just as investors created significant wealth by investing in coal during its long dominance, investors will now create significant wealth by investing in the future of energy, which does not include coal but instead solar, wind, and battery energy storage systems, with an emphasis on the latter.
Today’s major players in the battery energy storage space include Tesla (NASDAQ: TSLA), Fluence Energy (NASDAQ: FLNC), and BYD Company (OTC: BYDDY), and there will be more as this technology improves further and costs continue to decline.
While coal had a good run, this tried-and-true energy source will simply be unable to compete in a modern energy economy. This isn’t to trivialize coal’s contribution to the global energy economy, because there’s nothing trivial about it. But progress happens whether we’re ready for it or not. And investors who choose to eschew modern energy technologies while embracing a dying coal industry will be on the losing end of what will ultimately be a massive energy investment opportunity.
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Jeff Siegel does not own any positions mentioned. The Motley Fool has positions in and recommends Fluence Energy and Tesla. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
